After seven years and four ministers, broadband plan finally gets green light

Business Week: also in the news were jobs; expansion plans; banks; and executive pay

Then-minister for communications Pat Rabbitte (centre) at the launch of the National Broadband Strategy in 2012. Photograph: Brenda Fitzsimons

It’s a saga that’s been running for almost seven years, but the national broadband plan finally looks like it’s going to proceed.

Pat Rabbitte was the minister for communications when the plans were first announced way back in August 2012, and we have had three changes in minister since then. One of them – Denis Naughten – was forced to resign.

Even now, there remain serious concerns about the project and what it will cost us. The only remaining bidder in the process is the consortium led by American businessman David McCourt.

Indeed, ministers and senior officials fear the runaway costs of the plan – which was originally tagged to cost €500 million but is now expected to require an investment of €3 billion from taxpayers – could turn into a political time bomb.

Nonetheless, sources have said the Cabinet is likely to be asked the week after next to sign off on the plan to provide high-speed broadband to all rural areas not served by commercial operators.

Separately, refinancing plans at Eir are set to bring about a €300 million windfall for two New York hedge funds. Anchorage Capital and Davidson Kempner built up large positions in the telco following its debt restructuring in 2012.

They retained a combined 35.5 per cent holding after two companies owned by French billionaire Xavier Niel, took a controlling 64.5 per cent interest in the business.

Eir plans to raise €850 million through the sale of new bonds and a new debt facility, as well as pay a €300 million dividend to shareholders. The two hedge funds will share the money though, as they enjoy more favourable terms under the shareholder agreement.

Possible buyers

Staying with telecommunications, Vodafone, Virgin and Three have been touted as possible buyers of BT’s €460 million Irish unit, which the UK giant is selling off as part of a global restructuring of its business.

BT has so far refused to comment on reports of the sale, which has been linked to an accounting scandal at its Italian unit. The company has hired Bank of America Merrill Lynch to conduct the sale.

Meanwhile, the International Energy Agency has recommended that Ireland implement automatic upward adjustments of carbon taxes on specific sectors missing carbon emissions reduction targets over the next decade.

The agency said Ireland will remain dependent on natural gas in coming decades, and, if no new gas fields are found, the most cost-effective alternatives would have to be identified to maintain security of supply.

Jobs and high street expansion for Dublin

“We help people get jobs” is the slogan emblazoned across the T-shirts and hoodies at online recruitment company Indeed, and, thanks to expansion plans announced this week, another 600 people are to take up new roles there over the next five years.

The plans will bring the total number of employees the recruiter has locally to 1,600. The jobs will be across marketing, finance, strategy, operations, sales, client services, HR and business development.

In the west, US fashion company Rent the Runway is to create another 150 jobs over the next three years with the opening of its first international technology hub in Co Galway. The jobs will be aimed at engineers and developers.

Meanwhile, the growth in our international financial services sector is set to continue, albeit at a slower pace than previously figured. The Government’s new strategy aims to deliver 5,000 net new jobs in the sector between 2020 and 2025.

That is just half the level of job creation of previous strategies for the sector, which is because the Government believes artificial intelligence technology and more automation in financial services is going to reduce the number of jobs in certain areas.

There is expansion on the high street too with up-market Dublin foodhall and restaurant group Fallon & Byrne looking to raise about €6 million of fresh capital to fund a major expansion plan.

Large extension

The group is planning a large extension at its city centre flagship and a new retail outlet at Connolly railway station in Dublin, and will also open a major new outlet in Dundrum Town Centre once an extension there is built in the coming years.

Another major Dublin expansion – this time at the Mercantile pub and hotel on Dame Street – has hit a snag after solicitor John Synnott objected to the €10 million plan and said he has no intention of moving his practice to facilitate it.

Other corporate developments this week saw embattled travel software group Datalex announce that trading in its shares will be suspended from May 1st as the company missed an end-April deadline to publish its latest annual figures.

Finally, Uniphar, the pharmaceuticals wholesaler and retailer chaired by Maurice Pratt, has begun sounding out potential investors for an IPO that could raise €150 million.

Shareholder revolt over pay

The issue of executive pay raised its head again this week as more than 20 per cent of shareholders at Glanbia voted against plans to give chief executive Siobhán Talbot a 22 per cent pay increase.

The food group promised to engage with shareholders on its remuneration policy after the revolt, but many of its suppliers are angry after being hit by a reversal in milk prices globally.

Over at State-owned AIB, its annual general meeting heard more whingeing that ongoing pay restrictions and a ban on bonuses across bailed-out banks “remains a real concern” in terms of attracting and retaining top talent.

Separately, Cerberus, the US distressed debt giant that recently acquired a €1 billion portfolio of non-performing loans from AIB, has raised $5.1 billion to buy more bad loans.

Over at Bank of Ireland, UK asset manager M&G Investments has emerged as key to the bank being able to remove €375 million of problem loans from its balance sheet.

M&G bought 95 per cent of the lowest rank notes – or equity portion – of a bond transaction Bank of Ireland used this month to refinance the non-performing, but mainly restructured, buy-to-let mortgages in the bond market.

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